Electronics Arts cuts outlook on weak holiday sales

NEW YORK (Reuters) - Electronic Arts Inc (ERTS.O) warned that its fiscal 2009 profit and revenue will fall short of already-low forecasts due to disappointing holiday sales of its video games in North America and Europe.

The surprise announcement drove shares of the video game publisher down 10 percent in after-hours trading, on top of an 11.5 percent decline in the Nasdaq session on Tuesday.

EA had already slashed its fiscal 2009 estimates in late October, blaming slowing demand at retail stores and a delay in the release of its latest "Harry Potter" video game.

In contrast, smaller rival Take Two Interactive Software Inc (TTWO.O) and Xbox game console maker Microsoft Corp (MSFT.O) told the Reuters Media Summit last week that holiday game sales were better than expected despite the recession.

"I think they're basically floundering in terms of what to do this quarter and this year in general," Todd Mitchell, analyst at Kaufman Bros, said of EA.

He said EA has been hit by market share gains by Nintendo Co Ltd's (7974.OS) Wii, which publishes most of its own top selling games. He also pointed to tighter inventory management at retailers who do not want to overstock during uncertain economic times.

EA, which makes games like "Madden NFL" and "FIFA Soccer," said it is continuing to pursue cost saving measures such as reducing its product portfolio for fiscal 2010 with associated job cuts and facility consolidations.

"We are disappointed that our holiday slate is not meeting our sales expectations," EA Chief Executive John Riccitiello said in a statement. "Given this performance and the uncertain economic environment, we are taking steps to reduce our cost structure and improve the profitability of our business."

The company said it does not expect to provide specific financial guidance for fiscal 2009 before it reports third-quarter results in early February.

EA would have been expecting leading sales from the popular "Rock Band" but early analyst reports have shown the video game music genre to be weaker than expected, according to Mitchell.

The company also unveiled in November its first personal training game, tapping into the growing appeal of the "Wii Fit" title earlier this year.

EA shares, which fell 11.52 percent to close at $19.35 on Nasdaq, lost another 10.4 percent to $17.34 in after-hours trading.

(Reporting by Yinka Adegoke; editing by Richard Chang)